Hedge Funds Benefit Volcker Rule

Hedge Funds Benefit Volcker Rule

Scaramucci: Volcker Rule Helps Hedge Funds not Economy

According to the head of Skybridge Capital, hedge funds will reap the benefits of the new Volcker Rule while the economy pays the price. The Rule limits proprietary trading by banks and while it is aimed to protect the economy from another financial crisis, Anthony Scaramucci argues that it will end up hurting the economy.

The Volcker rule, enacted this year to curtail proprietary trading by U.S. banks, keeps rival traders out of his business, said Anthony Scaramucci, managing partner of SkyBridge Capital LLC, who spoke today at the Bloomberg Hedge Funds 2010 conference. Goldman Sachs Group Inc., JPMorgan Chase & Co and Bank of America Corp. have cut jobs in proprietary trading or shifted traders into other units to comply with the law.

A proposed rewrite by Republican lawmakers to allow banks back in “would be bad for hedge funds and bad for my firm. It would be better for society,” Scaramucci said. “Anytime you’re taking speculators out of a market, you’re widening spreads. When you widen spreads, you’re increasing the costs of transactions for normal citizens. When you increase the costs for normal citizens, it hurts the society.” Source

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